As adults, we use a credit card often, because it is a small piece of plastic that easily fits in our wallet, so we do not need to carry too much cash with us. Credit cards as a credit system that allows the consumer to borrow money on the fly from a bank or a financial institution and use it to make payments to the merchants. A credit card is very convenient to use when we go shopping online or offline. Does Your College Child Needs Good Student Credit Cards?
Although some credit cards have strict requirements, there are a lot of manufacturers that are giving both high school and college students the chance to get their own credit cards. Student credit cards can be used the same way as a traditional credit card, although they do come with certain restrictions and limitations that other credit cards don’t normally have.
A lot of companies and banks that offer student credit cards will normally need a co-signer as a form of insurance or collateral. This person will sign on the loan with the student, and will be the person the company falls back on if the student is unable to pay the bill. Normally a parent or guardian, the co-signer is considered to be back up and a peace of mind for the issuer of the student credit card, as they can always count on the co-signer with good credit to pay if the student can’t.
Normally, the APR or interest rate is higher with student credit cards, which helps to minimize the risk for the company. The spending limit is also different with these credit cards, as most are between 250 – 800 dollars. The reason for this, is because most students have established any credit, and therefore won’t have a great credit rating. Although the spending limit is obviously lower with these cards than other credit cards, they will still help students establish credit.
Students who plan to make a large purchase, can greatly benefit from using student credit cards. If your college student child is going to out of state college, he or she may need buy airplane ticket, if your college student has a student credit card, he or she can buy his or her airplane ticket online, which is very convenient.
A college student can use these student credit cards as a stepping stone to building credit, and establishing a good credit rating. If you can get your credit rating high with your credit card, you’ll then be able to be approved for much higher loans in the future.
Student credit cards can also help students gain a sense of responsibility. The card works just like any other credit card, although the spending limit is much lower. Once the student has mastered usage of the card, he or she can manage money much better later on in life. These cards are great for students to have, and can teach them money skills that will last a lifetime.
Just like traditional credit cards, students should also know that student credits cards can be dangerous. Although they are great to have, there are pitfalls such as overspending. If students spend more money than they having coming in, they will be unable to pay their credit card bill, which will then affect their credit. If the company goes after the co-signer to pay the bill, it could also affect their credit as well. Therefore, students should always have a budget in mind before they start using their credit cards.
All in all, student credit cards are great to have. For college students, these credit cards are a means of freedom, and a way to teach responsibility. They can come in handy during emergencies, which is reason enough to invest in them. If your son or daughter is going to go college or already in school right now, you should look into student credit cards. They can help your child to establish credit, which will take them farther wherever they go in life.
As a parent, what do you think? Help your child to learn to manage money is one of the most tasks to prepare him or her to go college and live independently. Do you think Your College Child Needs Good Student Credit Cards?
Please refer to “Great Money Management Book for Teens“.